Landed cost for importers in Qatar

Qatar imports almost everything. That means the price on the supplier invoice is rarely what the goods actually cost you.

What should be in the cost

• Ocean or air freight
• Customs duty
• Clearing and handling charges
• Inland transport to your warehouse
• Insurance
• Port storage and demurrage, where it occurs

If these are posted to expense accounts, the item cost is understated, gross margin looks better than it is, and stock on the balance sheet is undervalued.

How it works in practice

A landed cost voucher takes the additional charges and apportions them across the items on one or more purchase receipts. Apportionment is usually by value or by quantity — value for mixed shipments of different-priced goods, quantity where the items are similar and the freight is really driven by volume.

The valuation of the stock already received is then adjusted, and the accounting entry follows automatically.

The timing problem

The clearing agent's invoice arrives three weeks after the goods. By then some of the stock may already be sold. A proper landed cost process handles this: it adjusts what remains in stock and posts the balance to cost of goods sold for what has already moved.

What you must not do is wait for every charge before receiving the goods. Receive them, sell them, and apply the landed cost when it arrives.

Getting it right

• Agree the apportionment basis once and use it consistently.
• Post charges against the specific shipment, not a monthly lump.
• Reconcile the clearing agent's account monthly.
• Check a few items after each landed cost run — does the new valuation look sensible?

The test is simple. Pick any item in stock, look at its valuation rate, and ask whether you could actually replace it at that price.